What's so special about Apple? Other handset makers ask government

The government is considering a set of demands put forward by Cupertino-based Apple Inc before beginning to manufacture its phones in India. The local phone-making industry has also been against Apple’s demands to import refurbished phones.Gulveen Aulakh | ET Bureau | January 28, 2017, 08:52 IST

NEW DELHI: Global mobile phone makers operating in India have demanded that companies such as Samsung, Huawei and Vivo that have invested top dollars in local manufacturing should get similar incentives and parity on policy, which may be given to Apple, so that a level-playing field is created for all.

“To ensure a level-playing field, incentives should be extended to all brands offering similar value proposition, not only to a specific brand,” said Vikas Agarwal, general manager, OnePlus India.

Huawei, the world’s third largest smartphone maker, said equal benefits would lead to healthy competition and motivate brands to invest in India.

P Sanjeev, Huawei consumer business’ vice-president for sales, said: "Should the government extend benefits to any brand, those benefits should be brought under a policy umbrella and extended to all other manufacturers."

The government is considering a set of demands put forward by Cupertino-based Apple Inc before beginning to manufacture its phones in India. The local phone-making industry has also been against Apple’s demands to import refurbished phones.

Analysts note that top smartphone makers such as Samsung, Huawei, Oppo and Vivo already have local manufacturing in India without preconditions. They say market leader Samsung already locally manufactures over 90% of its devices in India, while Huawei has been investing in India for more than a decade.

“If the government is open to giving concessions or incentives to Apple, on the scale that they’re being demanded, then the same should be given to other players,” Jaipal Singh, senior analyst at International Data Corporation (IDC) India, said, adding, “The likes of Huawei, Oppo and Vivo have similar scale as Apple.”

Tarun Pathak, senior analyst at Counterpoint Research, said India needs Apple as much as it needs India. Despite having a toehold in the Indian market by volumes – 2.5 million iPhones sold in 2016 – CEO Tim Cook considers the South Asian nation an important market, amid slowing sales in developed nations.

According to sector experts, concessions to any mobile phone maker should be given not just for assembling devices locally but also value addition done within the country, which, at present, is not even one-tenth of local production.

Pathak said India imports iPhones worth Rs 1.8 billion, which needs to bereduced by making those phones locally. He also pointed out that concessions the government may grant should be dependent on the value addition the company does locally.

"The concessions should not be for pure assembly; if Apple only assembles phones here, the value addition will be very less as components will still be imported,” he added.

In order to improve value addition levels, which are at a mere 6% at present, the quantum of addition and the proportion of benefits should be defined.

According to an IIM Bangalore-Counterpoint study, contribution of locally sourced components and sub-components is just 6% to the total value of components going into a phone. It is estimated that true local value addition will be around $650 million of total $11.6 billion of total value of phones sold in 2016, keeping the value addition share stagnant.

“Given the right policy framework, this may also pave way for downstream investment in component-level manufacturing and kick-start export of goods,” OnePlus’ Agarwal added, underlining the importance of policy parity to make India a global manufacturing hub, which may otherwise take several more years.